Housing Market Outlook 2024–2025: Global and European Perspectives

The housing market accelerated again at the turn of 2024–2025. In the US, affordability is worsening due to record-high prices, elevated mortgage rates, and increasing inventory. In the EU, we observe a widening "scissors effect" between markets where prices are falling and those still pushing the index higher. In Slovakia, listing prices rose by double digits year-on-year in 1Q–2Q 2025 and reached new historical peaks by 2Q. Tensions are also visible in Košice, where prices remain just below their all-time highs, while rents are growing more dynamically. Macroprudential brakes by the National Bank of Slovakia (LTV/DTI/DSTI rules) mitigate the risk of a "hard landing." The baseline scenario remains a soft landing, with stronger regional heterogeneity and increasing emphasis on the quality of assets.

(Sources: freddiemac.com, European Commission, nbs.sk)

2. Legal Framework and Regulations: Slovakia's Safety Net

• LTV – typically capped at 80%, with a limited quota for 80–90% loans.

• DTI – upper limit roughly 8× annual net income.

• DSTI – around 60% of income, including stress-tests at higher rates.

Goal: to reduce systemic risks that triggered problems abroad when shocks hit interest rates or incomes. (nbs.sk)

3. US Lessons: Prices, Inventory, Mortgages, Sentiment

• Inventory & sales: According to NAR, as of July 2025, supply stood at about 4.1 months of existing homes, with the median price hitting a record ~$426,900. This combination of higher prices and rising inventory often precedes corrections if sentiment shifts or external shocks occur. (nar.realtor)

• Financing: The 30-year fixed mortgage rate hovered between 6.7–6.9% p.a. in late August 2025 (PMMS), further testing affordability for entry-level buyers. (freddiemac.com)

Implication for Europe: the US pattern of high prices + higher rates + more supply increases market sensitivity. Media coverage and capital market spillovers transmit part of this caution to Europe.

4. Europe: Heterogeneity and the ECB Transmission

• Price dispersion: Eurostat reported in 1Q 2025 an EU housing price index growth of +1.5% y/y (+1.3% in the eurozone), but with large differences: Germany and Sweden remain below peaks, while Czechia and Portugal drive growth. (European Central Bank)

• Monetary policy: The ECB cut the deposit rate to 3.25% in July 2025 while quantitative tightening continues. Transmission into mortgage rates depends heavily on fixation length—especially relevant for refixations in 2025–2027.

5. Slovakia: Fast Growth, Stricter Rules, Healthier System

• Prices: According to NBS, housing prices rose ~4% q/q in 1Q 2025, surpassing +10% y/y, with 2Q 2025 reaching new historical highs (+12.8% y/y). (nbs.sk, Realitná únia)

• Loans: NBS (Financial Stability Report, May 2025) confirmed a resilient financial system. Falling interest rates revived mortgage activity, yet the regulator warns against complacency in higher-risk profiles.

Takeaway: Compared to the US, Slovakia's stricter underwriting and shorter fixations spread shocks over time, implying gradual adjustments rather than abrupt swings—though regional volatility persists.

6. Why the US Scenario May Spill Over—and Why Differently

Similarities:

• Affordability pressure from prices vs. income.

• Slower sales when supply increases.

Differences:

• NBS macroprudential caps and EU supervision.

• Shorter mortgage fixations spreading risk across years.

• No "subprime" dynamics.

Outcome: more likely fluctuations and heterogeneity, less likely a systemic housing crash.

7. Scenarios 2025–2028: Soft Landing Still Dominant

Baseline "soft landing": inflation eases, rates drift lower, real wages grow. Price growth stabilizes around 2–4% p.a., with new builds retaining value due to construction costs and limited supply.

"Wavy plateau": stagnation or mild corrections 2025–2026, followed by recovery in 2027–2028 as refixations and demographics play out.

"Hard landing" (lower probability): external shocks + weaker eurozone could trigger –5% to –10% corrections in micro-locations, though systemic risk to banks remains limited thanks to prudential brakes.

8. Legal & Contractual Guidance

• Mortgages: Check refixation clauses and prepayment terms. Request amortization scenarios with +200–300 bps stress.

• Pre-sale contracts: Define indexation, material tolerances, delivery deadlines, bank guarantees, escrow.

• Rentals: Negotiate inflation clauses, review cycles, and service levels; benchmark long-term contracts against trusted indices.

• Due diligence: Verify local permits, project pipelines, infrastructure capacity, and include "material adverse change" clauses.

9. Košice: Data, Drivers, Outlook 2025–2030

• Current state: Košice remains a "hot" micro-economy. Affordability has slightly worsened, prices are close to record highs, and rents are accelerating due to students, professionals, and limited central supply. (nbs.sk)

• Industrial vector – Volvo/Valaliky: Mass production postponed to early 2027, but preparatory hiring and supplier demand continue, spreading demand pressure more evenly across time. (Reuters, Yahoo Finance)

• Labour & wages: Unemployment is low and real wages are rising. In Košice, joblessness is traditionally lower than in the wider region, supporting household purchasing power.

Scenarios for Košice (2025–2030)

• Baseline: Prices +2–4% p.a. in 2025–2026, then accelerating to +3–5% p.a. with industrial multiplier effects in 2027–2028, stabilizing at +2–3% p.a. by 2029–2030. Rents grow faster in the short term (+4–6% p.a.) before stabilizing.

• Correction scenario: Short –3% to –6% dip possible under external shocks, though prime new builds in central locations remain resilient.

10. Quick Indicators to Watch

• Absorption and "days on market."

• Inventory months vs. sales pace.

• Mortgage rates & bank margins (domestic + PMMS US).

• ECB guidance on QT.

• NBS data: quarterly prices, stability reports, macroprudential commentary.

11. Strategic Compass for Buyers, Investors, Developers

• Homebuyers in Košice: Compare energy-efficient new builds in the city centre vs. older units requiring capex. Keep LTV conservative and budget buffers ahead of refixations.

• Rental investors: Focus on liquid layouts (1.5–3 rooms) within walking distance to universities, hospitals, and offices. Evaluate tenant mix (expats, students, managers) and management quality.

• Developers: Phase launches based on absorption, use indexation/escrow in contracts, and consider rental housing as a stabilizer.

12. Conclusion: Tension Yes, Systemic Crisis No

Slovakia's housing market in 2025 is in a zone of heightened tension: prices are rising, affordability in some regions (including Košice) is worsening, and credit activity is picking up. But strict regulation and supervision reduce the probability of a systemic crash. The baseline remains a soft landing with regional volatility.

13. Recommendation: Why Renting at Košice City Centre Rental Apartments Makes Sense

If you are considering housing in Košice but want to avoid price and interest-rate volatility, premium long-term rentals in the city centre are a smart option. Košice City Centre Rental Apartments meet today's key housing criteria:

• Prime location in the historic core, walking distance to hospitals, TUKE, UPJŠ, and Hlavná street.

• Fully furnished, energy-efficient units with air-conditioning, fiber internet, and smart features—move-in ready with no upfront capex.

• Flexible lease terms from 3 months, contracts available in English/Slovak, direct rental from owner (no commission).

• Private parking, gated courtyard, digital access—security and privacy valued by managers, expats, and senior students.

• Verified tenant reviews (Google/Trustpilot) and 24/7 local support—minimizing operational risk.

Best suited for:

• immediate housing without renovation,

• temporary mobility (projects, relocation, trial periods),

• waiting for clearer price/interest trends before buying,

• keeping Total Cost of Occupancy predictable.